8:05 am, July 29, 2013
ACTIVITY in the used car market is carrying strong momentum and preventing severe erosion of trade values, despite the on-going push for new car registrations, says CAP.
Research for CAP’s Black Book Live during July revealed that trade values have fallen by an average of 1.6 per cent at the benchmark three years, 60,000 mile point.
However, the stability of the used car market at present is being achieved during the period of soaring new car sales, which has historically caused a significant increase in depreciation across the board due to reduced demand and vehicle values falling.
Similarly, the increase in the availability for nearly new vehicles in the used car market has often caused a severe imbalance of supply and demand, forcing later plate used car values to fall.
According to CAP, this year the used car market has remained relatively immune to the high performance of new cars, which saw a 13 per cent increase last month compared with June last year. The UK also remains the European automotive sector’s hot spot for new cars with 16 consecutive months of growth.
The only area of the used market that does show signs of particular trade price pressure is smaller cars, such as city cars and superminis, which are depreciating more quickly than the market overall.
CAP says this is likely to be the result of aggressive pricing in the new market, along with highly attractive PCP deals, making a new small car more affordable.
CAP has also identified that independent used car dealers, including the large car supermarkets, are leading the charge on used car retail sales as their franchise counterparts focus on new registrations.
Black Book Live senior editor, Derren Martin, said: ‘Although values are falling this should be seen in the context of a drive for new car sales which in previous years would have caused a slump in values and real pain in the used market.’
He added: ‘This year the whole market is benefiting from sustained retail demand and we expect nothing more severe than typical seasonal depreciation between now and September. The holiday season, together with the preparations for the ‘63’ plate introduction, points toward August being a quiet but orderly market.’
